Tạp chí khoa học và công nghệ - Trường Đại học Bình Dương – Quyển 6, số 3/2023

Journal of Science and Technology – Binh Duong University – Vol.6, No.3/2023

Legislation on insurance contracts - some inadequacies and

recommendations for finalization
Pháp luật về hợp đồng bảo hiểm - một số bất cập và kiến nghị hoàn
thiện
Tran Linh Huan1, Pham Thi Hong Tam2
1Ho Chi Minh City University of Law, Ho Chi Minh city
2
Phan Thiet University, Phan Thiet city
Corresponding author: Tran Linh Huan. Email: tlhuan@hcmulaw.edu.vn
Abstract: The insurance contract is an agreement between the policyholder and the insurance
company, in which the policyholder pays insurance premiums, and the insurance company pays
insurance benefits to the beneficiary or compensates the insured party in the event of an insured
event. Insurance contracts play a crucial role in recording and establishing the rights and
obligations of the parties involved in the insurance relationship. Currently, the Law on
Insurance Business of 2022 has introduced some adjustments regarding this type of contract;
however, it has not been fully perfected. Building on this premise, this article focuses on
analyzing and assessing certain limitations and shortcomings in the legal regulations pertaining
to insurance contracts based on the Law on Insurance Business 2022. Subsequently, it presents
recommendations for improvement.
Keywords: Insurance contracts; inadequacies and complete; law; law on Insurance Business
Tóm tắt: Hợp đồng bảo hiểm là sự thoả thuận giữa bên mua bảo hiểm và doanh nghiệp bảo
hiểm, theo đó bên mua bảo hiểm phải đóng phí bảo hiểm, doanh nghiệp bảo hiểm phải trả tiền
bảo hiểm cho người thụ hưởng hoặc bồi thường cho người được bảo hiểm khi xảy ra sự kiện
bảo hiểm. Hợp đồng bảo hiểm đóng vai trò rất quan trọng trong việc ghi nhận và xác lập quyền,
nghĩa vụ của các bên liên quan trong quan hệ bảo hiểm. Hiện nay, Luật Kinh doanh bảo hiểm
năm 2022 đã đưa ra những sự điều chỉnh về loại hợp đồng này, tuy nhiên điều này vẫn chưa
thật sự hoàn thiện. Xuất phát từ đó, bài viết tập trung phân tích, đánh giá làm rõ một số vấn đề
còn hạn chế, bất cập trong quy định pháp luật về hợp đồng bảo hiểm trên cơ sở Luật Kinh doanh
bảo hiểm 2022, từ đó đưa ra một số kiến nghị hoàn thiện.
Từ khóa: bất cập; hoàn thiện; hợp đồng bảo hiểm; Luật Kinh doanh bảo hiểm; pháp luật
1. Introduction passed by the National Assembly and
The Law on Insurance Business (LIB) No. became effective on January 1, 2023, with
24/2000/QH10 dated December 9, 2000, the expectation of ushering in a new
passed by the National Assembly (as development phase for the insurance market
amended and supplemented by Law No. in the coming years. One of the focal points
61/2010/QH12 dated November 24, 2010, of the amended and supplemented content
and Law No. 42/2019/QH14 dated June 14, is the regulation of insurance contracts
2019), has played a crucial role in the (ICs) – a pivotal provision in insurance
development of the insurance market in business operations. Hence, continuing
Vietnam for over two decades. However, research, review, and evaluation of the
LIB 2000 has revealed numerous provisions of LIB 2022 regarding this
shortcomings in its practical application, provision to clarify the remaining
failing to ensure uniformity and consistency shortcomings and limitations is essential.
with the relevant legal system of Vietnam This will allow for the formulating of
and our country's international proposals and recommendations for
commitments in this field. Therefore, on improvement, all necessary to protect the
June 16, 2022, LIB No. 08/2022/QH15 was

https://doi.org/10.56097/binhduonguniversityjournalofscienceandtechnology.v6i3.173 87
Legislation on insurance contracts - some inadequacies and recommendations for
finalization

legal rights and interests of the parties the contract related to random risks; (ii) The
involved in insurance business activities. performance of the IC is primarily to
2. Overview of Insurance Contracts mitigate and address the consequences of
risks; (iii) When entering into an IC, parties
Insurance is an activity where the insured
cannot foresee the consequences in
commits to compensate the policyholder in
advance; (iv) Determination of the insurer's
the event of a risk within the scope of
responsibility depends on whether
insurance, with the condition that the
insurance events occur or not [2, p. 11].
policyholder must pay a premium. This
Paragraph 1 of Article 15 of LIB 2022 has
means the policyholder transfers the risk to
made adjustments regarding types of ICs
the insurer by paying a premium to create a
compared to LIB 2000 [3], specifically
reserve fund. When the policyholder
including: Life ICs, Health ICs, and Non-
encounters a risk resulting in a loss, the
life ICs (Property ICs, Damage ICs, and
insurer will use the reserve fund to make
Liability ICs).
payments or compensate for damages
within the scope of insurance to the LIB 2022 also introduces a series of
policyholder [1, p.11-12]. This insurance amendments and supplements to meet the
activity has given rise to a legal relationship requirements of consistency and uniformity
between the insurer and the policyholder within the relevant legal system and new
based on the insurance contract (IC) as well requirements arising from practice,
as the provisions of the law. addressing the shortcomings of policy
mechanisms and the market. This ensures a
Inheriting the provisions of LIB 2000,
complete, transparent, equitable system of
Article 4(16) of LIB 2022 defines: "IC is an
insurance business policies, in line with
agreement between the policyholder and the
Vietnam's international commitments and
insurance company, the foreign non-life
following international standards for
insurance branch, microinsurance
insurance management and supervision,
cooperative organization, under which the
suitable for socio-economic development.
policyholder must pay a premium, and the
Some notable new points related to ICs
insurance company, the foreign non-life
include the addition of provisions regarding
insurance branch, microinsurance
the principles of concluding and performing
cooperative organization must compensate,
ICs in Article 16; the supplementation and
pay insurance money according to the
improvement of provisions related to the
agreement in the contract." From this
content and form of ICs in Articles 17 and
definition, it can be seen that the IC is
18 of LIB 2022; clarification of cases for
considered a legal form of the insurance
unilateral termination of IC performance
mechanism, reflecting an agreement to
and legal consequences in Article 26, 17 of
transfer risks between the policyholder and
LIB 2022; supplementation of provisions
the insurer (insurance company, foreign
regarding specific issues of group ICs
non-life insurance branch, microinsurance
(Article 42 of LIB 2022). Despite the initial
cooperative organization). Under this
successes achieved, LIB 2022 still has some
agreement, the policyholder pays a
remaining shortcomings and overlaps,
premium (which can be considered as the
which the author analyzes and comments on
cost of the risk) in exchange for a financial
below.
guarantee with the condition attached to the
occurrence of risks (insurance events) that 3. Current Provisions on Insurance
the policyholder may face [2, p.10]. The IC Contract Exclusion Clauses and
has several fundamental characteristics that Recommendations for Improvement
distinguish it from other types of contracts, 3.1. Provisions on Insurance Contract
including (i) Agreements among parties in Exclusion Clauses

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Tran Linh Huan, Pham Thi Hong Tam
According to LIB 2000 and LIB 2022
regulations, exclusion clauses in ICs are
understood as cases in which insurance
companies branches of foreign non-life
insurance companies are not obligated to
provide compensation or pay insurance
money [4]. In other words, when the insured
events are excluded from coverage in the
IC, even if such events occur, the
policyholders will not receive insurance
payouts or compensation.
Under the provisions of Article 17 of
LIB 2022, the content of ICs is not
mandatory to include exclusion clauses, as
required by LIB 2000. This represents a
progressive development as it removes
obstacles to designing insurance products
without such clauses, safeguarding the
autonomy of the insurance parties.
Furthermore, in cases where exclusion
clauses are included in the IC, the insurer
must clearly and comprehensively explain
these clauses to the policyholder. The
purpose of exclusion clauses in ICs is to
limit the insurer's liability in specific
circumstances, which are as follows:
First, to ensure that the insurance company
does not face the risk of insolvency when
significant losses occur, such as those
caused by natural disasters or war. One of
the fundamental principles of insurance is
to "spread the risk among many," meaning
that insurance functions properly when the
number of insured individuals significantly
outweighs those exposed to specific risks in
life, for which the insurance company must
fulfill its insurance obligations. Therefore,
to uphold this principle, excluding the
insurer's liability in certain exceptional
cases is necessary.
Second, to protect the insurer from
events that are not considered risks—cases
in which the policyholder or the beneficiary
intentionally triggers the insured event for
personal gain. Such intentional acts
contradict the principle of fortuitous risk—
insurable risks should be unexpected and
unforeseeable (Article 16, Paragraph 5 of
LIB 2022). According to the definition of
exclusion clauses in ICs in Article 19 of LIB
2022, cases listed under Article 40 of LIB
2022 are deemed as instances of exclusion
of insurance liability. These cases include:
a) The insured's suicide within 2 years from
the date of the first premium payment or the
effective date of the IC continuation; b) The
insured's death due to the intentional fault
of the policyholder or the intentional fault
of the beneficiary; c) The insured's
permanent disability due to the intentional
fault of the insured, the policyholder, or the
beneficiary; d) The insured's death as a
result of the death penalty. All these cases
involve intentional acts or legal violations.
Additionally, Article 40 of LIB 2022 allows
parties to the contract to agree on other
cases where the insurer is not obligated to
compensate or make payments under the
IC.
From the above analysis, it can be
affirmed that the provisions regarding IC
exclusion clauses are essential to protect the
insurer and ensure the humanitarian
principles of insurance. However, the
current regulations still have certain
obstacles and limitations, as described
below:
Firstly, LIB 2022 only defines the IC
exclusion clause and requires insurance
companies to explain the exclusion clause
to the policyholders when concluding an IC
without specifying any limitations,
conditions, or principles regarding the
determination of cases in which insurance
companies, branches of foreign non-life
insurance companies, are exempted from
their insurance liability. This could lead to
a situation where insurers may abuse this
right by introducing numerous unfavorable
exclusion provisions to policyholders,
thereby serving as a basis for refusing to
fulfill insurance obligations when risks
occur. For example, in Article 4.3.ii.a of the
regulations and terms of the "Peaceful
Longevity" insurance policy (approved by
Official Letter No. 1746/BTC-QLBH on
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Legislation on insurance contracts - some inadequacies and recommendations for
finalization
December 22, 2010, and amended and
supplemented by Official Letter No.
6740/BTC-QLBH on May 24, 2011, of the
Ministry of Finance) of AIA Vietnam Life
Insurance Company Limited (AIA): "No
insurance benefit shall be payable if: a. The
insured person does not survive for at least
thirty (30) days after being diagnosed with
a critical illness." In practice, disputes have
arisen between AIA and its customers when
the company invoked a similar provision to
deny insurance payouts. Specifically, just
five days after being diagnosed with an
illness, Mrs. T (the insured person) passed
away, and the insurance company refused to
pay the insurance benefits based on the
aforementioned provision in the IC. The
court of first instance and the appellate
court invalidated the exclusion clause,
citing the following arguments:
(i) The Civil Code respects the principle
of freedom of contract and self-
determination of the parties to the contract.
However, the law also stipulates that civil
transactions must be in accordance with
local customs, morals, and good traditions,
meaning that they must align with
traditional moral and ethical values and
regional language understanding. In this
specific case, it is necessary to understand
the policyholder's intent as insuring against
the risk of death, critical illness, and
accidents, which should be compensated
(except for suicide, execution, murder, or
death from old age). Deeming that Mrs. T
passed away less than 30 days after
diagnosis, as stipulated in Article 5, is
illogical in the context of life and does not
align with the policyholder's intent. It
should be understood that the contract
executed between Mrs. T and AIA must be
explained in accordance with Article 409 of
the 2005 Civil Code. Therefore, the general
spirit of civil law should be applied to
achieve a legal approach closer to justice";
(ii) Considering the entire main contract
terms and supplementary insurance product
clauses provided by AIA. Not everyone can
90
read and understand every clause in an IC.
ICs are written in specialized terminology
that may be difficult for ordinary
individuals to comprehend. However, the
law always respects the parties' agreement
to the contract, provided that the transaction
aligns with the regional language
understanding, does not contravene legal
provisions, and adheres to social and ethical
standards. In this case, it is essential to
understand Mrs. T's intent in purchasing
insurance to safeguard against the
unfortunate events of death, illness, and
disability due to accidents and to receive
compensation for financial risks. Therefore,
it should be understood that the terms of the
IC executed between Mrs. T and AIA must
be explained in accordance with Article 409
of the 2005 Civil Code, applying the general
spirit of civil law to resolve the matter. The
analyses above illustrate that the court of
first instance compelled AIA to pay Mrs.
T's beneficiaries the amount of VND
120,000,000 based on legal grounds" [5, p.
61-62].
The court's approach is persuasive and
reasonable, based on the principles of social
ethics and fairness in civil law when there
are no detailed provisions to protect the
legitimate rights of the policyholder
regarding the exclusion clauses. However,
it can be observed that the court relied
solely on the most general principles in civil
law that were in effect at the time of the trial
and that LIB 2022 did not provide any
specific regulations or limitations regarding
the invalidation of unreasonable and unfair
exclusion clauses introduced by insurers.
LIB 2022 creates a space for insurance
companies to design their insurance
products, including the discretion to
determine cases of exclusion of insurance
liability. The rules and terms of the mixed
insurance product covering serious
illnesses, paid over three extended periods
by Manulife Vietnam Limited Liability
Company, as approved in Official Letter
No. 1997/BTC-QLBH dated February 20,
Tran Linh Huan, Pham Thi Hong Tam
2019, by the Ministry of Finance in Article
19.2 regarding the exclusion of liability for
insurance events directly related to the
causes of explosions or radiation from
nuclear weapons, chemical, and atomic
weapons, and exposure to radioactive
contamination from nuclear and atomic
installations. The rules and additional
insurance terms for global health care
insurance products by Dai-Ichi Life
Insurance Company of Vietnam Limited, as
approved in Official Letter No.
11916/BTC-QLBH dated September 30,
2020, by the Ministry of Finance, in Article
3 regulating the exclusion of insurance
liability, only narrow the scope of insurance
by primarily listing specific diseases and
injuries that are not covered by this product.
The rules and terms of the whole life
insurance product with annual cancer
benefit extension by Prudential Vietnam
Assurance Private Limited Liability
Company, approved by the Ministry of
Finance in Official Letter No. 8912/BTC-
QLBH dated July 4, 2017, in Article 7.1
regarding exclusions in the event of the
insured's death, also list reasons related to
war (declared or undeclared), riots, civil
unrest, or violence. The rules and terms of
the life insurance product linked to 2018
entities, approved by the Ministry of
Finance in Official Letter No. 2536/BTC-
QLBH dated March 7, 2018, with
amendments and supplements in Official
Letter No. 1223/BTC-QLBH dated
February 10, 2020, in Article 10.1.1.c
include cases of HIV infection, AIDS, and
diseases related to AIDS, except for cases
of HIV infection while performing duties at
the workplace as a medical or law
enforcement personnel.
From the aforementioned real-world
examples, it is evident that there is a variety
of cases involving the exclusion of
insurance liability. However, there are still
situations where insurance events occur
randomly, and genuine losses or damages
exist, but the insured individuals or
beneficiaries are not covered for their risks,
such as death even though they did not
participate in causing riots or violence, or
HIV infection and AIDS outside of working
hours, without any intention.
Based on the analysis presented above,
the author proposes that LIB 2022 should
include provisions in a generalized manner
regarding limitations, conditions, or
principles for determining cases of
exclusion of insurance liability, which
could be stipulated as follows: "Cases of
exclusion of insurance liability may only be
agreed upon to ensure the insurer's ability to
pay or exclude cases of insurance abuse by
the policyholder or the insured." One
mechanism to effectively control the
creation and inclusion of exclusion clauses
by insurance companies and foreign non-
life insurance branches in contracts is
through the registration process of
insurance product models by the Ministry
of Finance, serving as a "filter" to eliminate
provisions that could infringe upon the
rights and legitimate interests of the
policyholder in the IC [6]. However, the
effective role of the Ministry of Finance in
this regard has not been fully realized
because, in practice, ICs, despite being
registered, still contain many provisions
lacking fairness and violating LIB
regulations.
Secondly, in addition to the obligation to
provide clear and comprehensive
explanations of the insurer's exclusion
clauses, Article 19.2 of LIB 2022 also sets
the requirement that such explanations must
be supported by evidence. Some opinions
argue that imposing such a requirement
creates an invisible hurdle, leading to
inequality among parties and procedural
inconvenience when entering into contracts
[7]. Considering the purpose of this
provision, which is to protect the
policyholder—the weaker party with less
specialized knowledge and less familiarity
with IC negotiations—supplementing such
a requirement is necessary to reduce
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Legislation on insurance contracts - some inadequacies and recommendations for
finalization
disputes, complaints, and litigation related
to inadequate explanations or lack of
understanding of crucial content such as
exclusion clauses. However, LIB 2022
provides no principles or framework for this
confirmation evidence. Therefore, the
confirmation evidence could be a separate
document, the policyholder's signature on
the insurance application confirming the
explanation of the IC, including exclusion
clauses, or other evidence to accommodate
electronic contract negotiations. Thus, if the
IC contains a provision stating that the
policyholder has explained the exclusion
clause, can that contract be considered
confirmation evidence? In practice, the
insurer may provide explanations merely as
a formality, prompting the customer to sign
a confirmation document or verbally
providing explanations that may not be
consistent or contradict the terms of the IC.
Moreover, LIB 2022 also lacks provisions
regarding the legal consequences of
violating this duty to explain, leading to
inconsistency and confusion in handling
such cases in practice.
Based on the analysis above, the author
proposes that LIB 2022 should incorporate
the following provisions:
(i) Confirmation evidence for explaining
insurance exclusion clauses must be in
written form, audio recordings, video
recordings, or electronic data as regulated
by electronic transaction laws, and it should
encompass the entire content of the insurer's
explanation, including foreign non-life
insurance branches.
(ii) In cases where the IC contains
different exclusion clauses compared to the
confirmation evidence, those different or
omitted clauses should not apply in the
event of an insurance occurrence.
3.2. Regarding the Terminology of "Cash
Surrender Value" and "Account Value"
The term "cash surrender value" is
mentioned in Article 37.4, Article 40.3,
Article 27.3, and Article 27.4 of LIB 2022,
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whereby the policyholder can receive cash
surrender value in the following cases:
(i) When an insurance event occurs, the
non-life insurance company or foreign non-
life insurance branch is not required to pay
insurance benefits or compensation.
(ii) Various unilateral contract
termination scenarios, such as the
policyholder not paying insurance
premiums or not paying the full insurance
premiums, disagreement between the
parties regarding changes in the insured risk
level, or the policyholder refusing to
transfer the policy portfolio.
Due to the savings nature of most life
insurance products, the amount of
premiums paid at a certain point in time
exceeds the total natural insurance
premium. Consequently, the contract has a
cash surrender value. Therefore, this
amount belongs to the policyholder and
must be returned to them.
The term "account value" is mentioned
in Article 116.3 of LIB 2022 as one of the
amounts that the insurance company or
reinsurance company must pay when
dividing assets due to bankruptcy. Clearly,
"cash surrender value" is an industry-
specific term in the insurance field.
However, when reviewing the provisions of
LIB 2000 and LIB 2022, even including
Civil Code 2015, there needs to be a
definition or explanation of this industry-
specific term. This lack of definition fails to
ensure the transparency of legal regulations,
leading to different interpretations and
difficulties for policyholders when
accessing this market [8].
In practice, insurance companies use
various terms, making it challenging to
determine which term corresponds to "cash
surrender value" or "account value" as
defined in LIB 2022. Additionally,
calculating the actual amount of cash
surrender value or account value is
extremely complex and difficult to
understand.
Tran Linh Huan, Pham Thi Hong Tam
Based on the analyses presented above,
to ensure a uniform understanding of cash
surrender value, the author proposes that
LIB 2022 should include definitions and
explanations for "cash surrender value" and
may explain "cash surrender value" as
follows: "Cash surrender value is the
amount owned by the policyholder and
returned to the policyholder when the life
IC terminates without an insurance event.
The cash surrender value equals the total
premiums paid by the policyholder plus any
accrued interest (if applicable) minus the
total fees/costs/liabilities owed to the
insurance company.
3.3. Provisions on Contract
Reinstatement
Unlike other types of ICs, life ICs are
concerned with the duration of human life,
leading to long-term contracts that may
extend for 5, 10, or even a lifetime. Due to
the extended premium payment periods,
policyholders may face financial
difficulties preventing them from fulfilling
their contracts, potentially resulting in
unilateral contract termination. In such
cases, Article 37.3 of LIB 2022 allows the
parties to agree to reinstate the contract
within 2 years. Conditions that may be
agreed upon for reinstatement include:
(i) The policyholder has paid any
outstanding insurance premiums.
(ii) The reinstatement occurs within 2
years from the termination of the life IC.
(iii) This provision applies only in cases
where the life IC was unilaterally
terminated by the policyholder due to their
inability to continue, despite having the
option to extend premium payments,
excluding other scenarios.
Given the long-term and savings-
oriented nature of life ICs, most countries'
legal systems allow for the reinstatement of
contracts. This is intended to allow the
parties to continue exercising their rights
and fulfilling their obligations, thereby
avoiding the termination of contracts when
both parties are still capable and willing to
continue [9]. On the other hand, according
to Article 3.2 of the 2015 Civil Code, which
lays down the fundamental principles of
civil law, individuals and legal entities can
establish, exercise, and terminate their civil
rights and obligations based on voluntary
and consensual agreements, provided that
these agreements do not violate any
prohibitive provisions of the law and are in
line with social ethics. Therefore, imposing
conditions as described above is
unnecessary.
Article 37.3 of LIB 2022 merely states
that "the parties may agree to reinstate the
terminated life IC" without specifying the
form of this agreement, such as whether it
must be in writing, as required for the IC
itself. In practice, disputes have arisen over
asset-based ICs, but similar to life IC
reinstatement. These disputes have been
resolved and summarized in judgment No.
37/2020/AL regarding the validity of asset-
based ICs in cases where the policyholder
paid insurance premiums after the premium
payment period ended (source judgment
based on the Director's Decision No.
28/2018/KDTM-GĐT dated June 26, 2018,
regarding a trade dispute IC in Dong Nai
Province) as follows:
“[4]... After receiving the insurance
premium from Company N, the Joint Stock
Insurance Company P and Insurance
Company P1 had no objections and did not
provide any written notice regarding late
premium payments. As a result, both
contracts became ineffective as of May 1,
2015. However, Insurance Company P1
still accepted, issued value-added tax
invoices and reported taxes for the two
insurance premium payments received from
Company N. Therefore, Joint Stock
Insurance Company P and Insurance
Company P1 implicitly acknowledged
Company N's late insurance premium
payments and recognized the validity of
these two contracts. [5] Consequently,
when an insurance event occurs, Joint Stock
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Legislation on insurance contracts - some inadequacies and recommendations for
finalization
Insurance Company P must assume
responsibility for compensation as
stipulated in the contracts signed by both
parties."
The application of the contract's
continued validity, as per Judgment No.
37/2020/AL, is within the scope of cases
that meet the following conditions:
(i) The contract specifies that if one
party violates the deadline for performing
obligations, the contract will be naturally
invalidated.
(ii) The party that violates the obligation
performs it late, and the other party agrees
or does not object [10, p. 667].
Therefore, the unilateral termination of
the contract, as stipulated in Article 26.1
and Article 37.3 of LIB 2022, does not
automatically render the IC void. However,
it leads to the same legal consequence,
which is the termination of the contract. The
agreement to continue the IC's validity
during disputes is not established in writing
but in specific actions. For example,
Insurance Company P1 continued to accept,
issue value-added tax invoices, and report
taxes for the two insurance premium
payments received from Company N.
Similarly, with the agreement to reinstate
the contract's validity, there should be no
strict requirement for a written agreement to
be effective.
Based on the arguments presented, the
author proposes some amendments and
additions as follows:
Firstly, it is necessary to amend Article
34.4 of LIB 2022 to reflect that the
reinstatement of the contract's validity is
based on the parties' agreement without
imposing additional conditions as analyzed.
Secondly, there should be provisions
regarding the form of agreement for
reinstating the contract's validity by
insurance companies or foreign branches.
This agreement could be through the
policyholder's premium payment, except in
cases where the policyholder reinstates the
94
contract with the intention of insurance
fraud.
Thirdly, expand the scope of the
provision on contract reinstatement to apply
not only to life ICs but also to health ICs and
property ICs when premium payments are
divided into one or more installments
3.4. Provisions on Responsibilities and
Legal Consequences of Violating
Information Provision Obligations
When entering into ICs, providing
accurate and truthful information is of
utmost importance because information
forms the basis for the parties to consider
and decide on the IC, as well as its
conditions and terms. In practice, there are
numerous ICs where the obligation to
provide information is not fulfilled or
inaccurate information is provided within
the relevant timeframe [11].
One new aspect of LIB 2022 has
addressed the overlapping issues that
existed in the 2000 version when dealing
with the consequences of providing
inaccurate information. Accordingly, the
stipulation for contract cancellation is
applied as a replacement for the suspension
of contract performance or contract
nullification. Handling the legal
consequences of these ICs as void, as
provided for in Article 127 of the 2015 Civil
Code, is unfeasible because it requires a
court declaration of nullity, which adds
complexity and cost burdens for both
insurers and policyholders. Additionally,
Article H of Article 25 of LIB 2022
eliminates cases of providing false
information to initiate a contract to prevent
confusion. This new point has contributed
to resolving overlaps and complexities in
handling the consequences of violating
information provision obligations and
enhancing the responsibilities of each party
when entering into ICs.
According to the provisions in Article
22.2 and 22.3 of LIB 2022, the acts
considered violations of information
Tran Linh Huan, Pham Thi Hong Tam
provision obligations for each party are as
follows:
(i) For the policyholder: intentionally
providing incomplete or false information
to initiate the IC for compensation or
insurance payments.
(ii) For insurance companies or foreign
non-life insurance company branches:
intentionally failing to fulfill the obligation
to provide information or providing false
information to initiate the IC.
Therefore, the basic behavior of each
party is essentially the same, including
providing incomplete or false information.
Similar to LIB 2000, LIB 2022 also
raises the issue of fault on the part of the
violator, specifically intentional fault. So,
what basis is there to prove whether a party
has a fault or is without fault, whether
intentional or unintentional? Is the
insurance company allowed to have
unintentional faults that lead to violations
and not be held responsible for its business
function? The author agrees that
determining whether the violating party has
a fault (intentional or unintentional) is
unnecessary when determining whether
there has been a violation. Therefore, when
requesting the application of contract
cancellation, the violating party does not
need to prove the fault of the violating party
but only the existence of the violation [12,
p. 626]. However, in the IC relationship,
policyholders often have limited
understanding of ICs, do not fully grasp the
meaning, purpose, and significance of the
information provision obligation, or may
not remember all the details about their
health and medical history. Therefore, if not
explained clearly, the violation by the
policyholder could be unintentional. In
contrast, insurance companies and foreign
non-life insurance company branches are
business entities that conduct their business
professionally and should understand and
be responsible for providing accurate and
complete information without citing
unintentional reasons to avoid
responsibility.
Based on the above analysis, the author
proposes amending the provisions in Article
22 of LIB 2022 by removing the element of
fault when determining the violation,
specifically as follows: "In cases where
foreign non-life insurance companies or
foreign non-life insurance company
branches intentionally fail to fulfill the
obligation to provide information or
provide false information to initiate the IC,
the policyholder has the right to cancel the
IC and receive a refund of the insurance
premiums paid.”
4. Conclusion
In essence, LIB 2022 has introduced
numerous reforms and advancements to
address the contradictions and
shortcomings of the previous LIB with
other legal normative documents
concerning IC regulations. However, some
limitations still exist and need to be
rectified, particularly in terms of provisions
related to liability exclusion clauses,
specialized terminology, contract
reinstatement, and legal consequences, as
discussed above. In the scope of this article,
the author has provided an overview of ICs,
analyzed and assessed the aforementioned
limitations, and proposed improvements.
This effort aims to ensure the consistency
and coherence of the legal framework and
safeguard the lawful rights and interests of
relevant parties in insurance relationships,
thereby promoting the stability and
development of this field.
References
[1] National Economics University,
“Insurance Textbook”, Statistical
Publishing House, Hanoi, 2000, pp. 11-12.
[2] T. P. Thu, “Law on Property Insurance
Contracts in Vietnam, Master's Thesis in
Law”, Hanoi National University, 2014,
pp. 10.
[3] Section 2 of Article 12 of LIB 2000 states:
“2. Types of Insurance Contracts include:
a) Human Insurance Contracts;
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Legislation on insurance contracts - some inadequacies and recommendations for
finalization

b) Property Insurance Contracts; [8] M. Phuong, “Premium Payment of 120

c) Civil Liability Insurance Contracts”. Million, Settlement of the Contract
[4] Paragraph 1 of Article 19 of LIB 2022 Receiving Over 36 Million”, 2021.
contains similar provisions to Paragraph 1 [Online]. Availabe:
of Article 16 of LIB 2000, which states. https://thanhnien.vn/dong-bao-hiem-120-
trieu-tat-toan-hop-dong-nhan-duoc-hon-
“Article 16 of LIB 2000 on Exemption
36-trieu-post1055498.html. [Accessed
Clauses in Insurance Contracts
02/10/2023].
1. Exemption clauses in insurance
[9] N. T. N. Han, “Legal Aspects of
contracts stipulate cases where insurance
Terminating Life Insurance Contracts,
companies are not obligated to
Master's Thesis in Law”, University of
compensate or pay insurance money when
Law, Ho Chi Minh City, 2011, pp. 35.
an insurance event occurs”.
[10] L. T. Dung, “Vietnamese Case Law -
[5] D. V. Dai, “Some Legal Issues Arising in
Analysis and Commentary from Case
the Practice of Life Insurance”, Legal
Number 01 to Case Number 43”, Legal
Science Journal of Vietnam, Issue
Publishing House, Hanoi, 2021, pp. 667.
07(119), pp. 61-62, 2018.
[11] Report on explanation, reception, and
[6] D. P. Thao, “Exclusion of Liability in
adjustment of the draft Law on Insurance
Insurance Contracts”, 2018. [Online].
Business (amended) on April 14, 2022, by
Availabe: https://tapchitoaan.vn/bai-
the National Assembly's Standing
viet/kinh-te/loai-tru-trach-nhiem-bao-
Committee.
hiem-trong-hop-dong-kinh-doanh-bao-
hiem. [Accessed 02/10/2023]. [12] T. N. Quang, “Contract Law”, Dân trí
Publishing House, 2020, pp. 626.
[7] VCCI, “Comments on the Draft Law on
Insurance Business”, 2022. [Online].
Ngày nhận bài: 18/9/2023
Availabe:
http://vibonline.com.vn/bao_cao/vcci_go Ngày hoàn thành sửa bài: 25/9/2023
p-y-du-thao-luat-kinh-doanh-bao-hiem. Ngày chấp nhận đăng: 26/9/2023
[Accessed 02/10/2023].

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